(Adds upgrades by investments banks, updates share price)
LONDON, July 29 (Reuters) - Logistics company Exel Plc reported a 13 percent jump in first-half profit on Monday and said it was on course to meet market expectations for the year provided trading conditions did not worsen.
The results drew cheer from the market, prompting upgrades on the company from at least two investment banks.
Shares in Exel, which stores and transports goods for firms like Safeway and Selfridges , were up almost seven percent at 773 pence by 1420 GMT after falling to 702 pence earlier in the day.
"Notwithstanding the current financial impact of the weaker dollar, the group remains confident that, barring any deterioration in global trading conditions, Exel should achieve market expectations for 2002," Chief Executive John Allan said in a statement.
Pre-tax profits before exceptional items and goodwill rose to 100.3 million pounds ($157.1 million) for the half year to June 30 from 88.6 million last year, beating consensus forecasts of 98.5 million.
First half profit forecasts ranged from 94 million pounds to 100 million. The market expects Exel to post annual pre-tax profits of about 200 million pounds.
Exel, which also carries out waste management, said group turnover rose three percent to 2.24 billion pounds from 2.18 billion.
The company recommended an interim dividend of 7.5 pence per share, up seven percent from the previous year.
ING Financial Markets said it had raised its recommendation on Exel to "buy" from "hold".
ING analyst Mike Stoddart said Exel's business was beginning to recover from the depressed conditions in the airfreight market in the last two years and set a price target of 800 pence on the share.
WestLB Panmure, setting a price target of 900 pence, raised its recommendation on the company to "buy" from "outperform".
"Exel remains cautious, as always, about the outlook but it is becoming increasingly obvious that the group's business model of offering integrated supply chains solutions globally is a key driver of earnings growth and market share gains," analyst John Lawson said in his report.
NEW CHAIRMAN
Exel said its present non-executive chairman John Devaney would retire from September 30 and would be succeeded by deputy chairman Nigel Rich.
The freight management business saw strong growth with rising business volumes and growing market share across all regions.
"With major customers continuing to outsource most of their logistics needs, Exel remains well positioned to benefit from these initiatives and to achieve its medium-term growth objectives," Allan said.
He told reporters in a conference call that margins in Exel's mainstay logistics business were down year on the year, hit by a weak performance at its European operations, especially in Spain.
Allan added Exel had a "very strong cash generating business model" with first half free cash flow of 60.9 million pounds -- around 15 times the group's interest cover.
Exel also said it had secured new business worth 350 million pounds in annualised value during the first half and, after contract losses, it expected the contracts to add over 220 million pounds to future turnover.
New businesses included a 500 million pound logistics project with Interbrew , the world's third largest brewer, and a 12-million-pounds-a-year, 10-year contract from Sweden-based car maker Saab Automobile.